Why Companies Should Train Their People

Ben Horowitz is a renowned entrepreneur, investor, and author. He wrote the following post on the importance of employee training. In short, Ben believes, “There is no investment that you can make that will do more to improve productivity in your company.”

We loved Ben’s thought process and asked him if we could republish the post on our blog. He said yes, so here it goes:

Teachers teach and do the world good kings just rule and most are never understood
—KRS-One, My Philosophy

When I first became a manager, I had mixed feelings about training. Logically, training for hi-tech companies made sense, but my personal experience with training programs at the companies where I had worked was underwhelming. The courses were taught by outside firms who didn’t really understand our business and were teaching things that weren’t relevant. Then I read chapter 16 of Andy Grove’s management classic High Output Management entitled Why Training is The Boss’s Job and it changed my career.

Most dramatically, when I was Director of Product Management at Netscape, I was feeling frustrated by how little value most product managers added to the business. Based on Andy’s guidance, I wrote a short document called Good Product Manager/Bad Product Manager which I used to train the team on my basic expectations (and I include at the end of this post). I was shocked by what happened next. The performance of my team instantly improved. Product managers that I previously thought were hopeless became effective. Pretty soon, I was managing the highest performing team in the company. Based on this experience, after starting Loudcloud, I heavily invested in training. I credit that investment with much of our eventual success. And the whole thing started with a simple decision to train my people and an even simpler training document. So, I will now pay forward my debt to Andy Grove and explain why, what, and how you should do the same in your company.

Why you should train your people

Almost everyone who builds a technology company knows that people are the most important asset. Properly run start-ups place a great deal of emphasis on recruiting and the interview process in order to build their talent base. Unfortunately, often the investment in people stops there. There are four core reasons why it shouldn’t:

1. Productivity

Often I see startups keep careful statistics of how many candidates they’ve screened, how many have made it to the full interview process and how many people they’ve hired. All of these statistics are interesting, but the most important statistic is missing: how many fully productive employees have they added? By failing to measure progress towards the actual goal, they lose sight of the value of training. If they measured productivity, they might be horrified to find that all those investments in recruiting, hiring, and integration were going to waste. Even if they were made aware of low productivity among new employees, most CEOs think that they don’t have time to invest in training. Andy Grove does the math and shows that the opposite is true:

Training is, quite simply, one of the highest-leverage activities a manger can perform. Consider for a moment the possibility of your putting on a series of four lectures for members of your department. Let’s count on three hours preparation for each hour of course time—twelve hours of work in total. Say that you have ten students in your class. Next year they will work a total of about twenty thousand hours for your organization. If your training efforts result in a 1 percent improvement in your subordinates’ performance, your company will gain the equivalent of two hundred hours of work as the result of the expenditure of your twelve hours.

2. Performance Management

When people interview managers, they often like to ask: have you fired anyone? Or how many people have you fired? Or how would you go about firing someone? These are all fine questions, but often the right question is the one that isn’t asked: When you fired the person, how did you know with certainty that the employee both understood the expectations of the job and were missing them? The best answer is that the manager clearly set expectations when she trained the employee for the job. If you don’t train your people, you establish no basis for performance management. As a result, performance management in your company will be sloppy and inconsistent.

3. Product Quality

Often founders start companies with visions of elegant, beautiful product architectures that will solve so many of the nasty issues that they were forced to deal with in their previous jobs. Then, as their company becomes successful, they find that their beautiful product architecture has turned into a Frankenstein. How does this happen? As success drives the need to hire new engineers at a rapid rate, companies neglect to train the new engineers properly. As the engineers are assigned tasks, they figure out how to complete them as best they can. Often this means replicating existing facilities in the architecture, which lead to inconsistencies in the user experience, performance problems, and a general mess. And you thought training was expensive.

4. Employee Retention

During a time of particularly high attrition at Netscape, I decided to read all of the exit interviews for the entire company to better understand why people quit hi-tech companies. After putting economics, aside, I found that there were two primary reasons why people quit:

They hated their manager – generally the employees were appalled by the lack of guidance, career development and feedback they were receiving.

They weren’t learning anything – the company wasn’t investing in the employees.

An outstanding training program can address both issues head-on.

What Should You Do First?

The best place to start is with the topic that is most relevant to your employees: the knowledge and skill that they need to do their job. I call this functional training. Functional training can be as simple as training a new employee on your expectations for them (see Good Product Manager/Bad Product Manager) and as complex as a multi-week engineering boot camp to bring new recruits completely up-to-speed on all of the historical architectural nuances of your product. The training courses should be tailored to the specific job. If you attempt the more complex-style course, be sure to enlist the best experts on the team as well as the manager. As a happy side effect, this type of effort will do more to build a powerful, positive company culture than 100 culture-building strategic offsite meetings.

The other essential component of a company’s training program is management training. Management training is the best place to start setting expectations for your management team. Do you expect them to hold regular 1:1s with their employees? Do you expect them to give performance feedback? Do you expect them to train their people? Do you expect them to agree upon objectives with their team? If you do, then you’d better tell them, because the management state-of-the-art in technology companies is extremely poor. Once you’ve set expectations, the next set of management courses has already been defined; they are the courses that teach your managers how to do the things you expect (how to write a performance review, how to conduct a 1:1, . . .)

Other interesting topics — Once you have management training and functional training in place, there are other opportunities as well. One of the great things about building a tech company are the amazing people that you can hire. Take your best people and encourage them to share their most developed skills. Training in such topics as negotiating, interviewing, finance, etc. will enhance your company’s competency in those areas as well as improving employee morale. Teaching can also become a badge of honor for employees who achieve an elite level of competence.

Some Keys for Implementing Your Training Program

Now that we understand the value of the training and what to train on, how do we get our organization to do what we want? The first thing to recognize is that no start-up has time to do optional things. Therefore, training must be mandatory. The first two types of training (functional and management) can be easily enforced as follows:

Enforce functional training by withholding new employee requisitions – As Andy Grove writes, there are only two ways for a manager to improve the output of an employee: motivation and training. Therefore, training should be the most basic requirement for all managers in your organization. An effective way to enforce this requirement is by withholding new employee requisitions from managers until they’ve developed a training program for the TBH.

Enforce management training by teaching it yourself – Managing the company is the CEO’s job. While you won’t have time to teach all of the management courses yourself, you should teach the course on management expectations, because they are, after all, your expectations. Make it an honor by selecting the best managers on your team to teach the other courses. And make that mandatory too.

Ironically, the biggest inhibitor to putting a training program in place is the perception that it will take too much time. Keep in mind, that there is no investment that you can make that will do more to improve productivity in your company. Therefore, being too busy to train is the moral equivalent of being too hungry to eat. Furthermore, it’s not that hard to create basic training courses. I include Good Product Manager/Bad Product Manager to illustrate. Enjoy.

Warning: The Good Product Manager/Bad Product Manager document was written 15 years ago and is probably not relevant for today’s product managers. I present it here merely as an example of a useful training document.
Reposted with permission from Ben Horowitz’s blog.